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tv   Fast Money Halftime Report  CNBC  January 12, 2016 12:00pm-1:01pm EST

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that the problem began with saudi arabia. a couple of upgrades ahead of that. goldman sachs yesterday both saying this is a buying opportunity for a stock that could shrug off some of those trading weaknesses we've seen in other companies. >> as cashin would say, stay nimble. let's get back to headquarters. scott and "the half." ♪ all right, guys. welcome to "the halftime show." let me introduce you. pete is here along with sarat, stephanie, and joe. our game plan looks like this. upward dog. why lululemon shares are spiking at this hour, is the stock now primed for a new run? the under 20 club, what to do with twitter, fitbit and gopro as each of those stocks drops below that closely watched level of $20. we do begin with the markets. stocks unable to get anything going, and a lot of that has to
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do with where crude oil is at this hour. take a look. falling to its lowest level now since 2003. taking some big name stocks with it. i want to show you these moves because they really are stunning. the moves in freeport, marathon, alcoa, williams. when you realize how much they're down, joe, this year alone -- we're talking 12 days. not even 12 trading days. freeport is down 45% year-to-date. williams 32. marathon, 28. alcoa, 27. that is stunning. >> this seems to be the moment. this seems to be what we feared. this seems to be the 2008 moment for the natural resources, the energy, the mining names. it's happening right now. it's the reason why the s&p 500 cannot rally. it's the reason why i believe we're going to take out the lows at $18.50 to $18.60. >> we need a bail-out for the oil companies. >> you're not going to get one. we'll talk about that in a little bit, but what happens right now? why is this happening?
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you're seeing the high yield energy names coming under pressure. that leads to significant selling pressure on the equity side. whether you are talking about a upl, a cliff's natural, btu, names you haven't mentioned that are in trouble right now. pete will talk about it later. you have seen a tremendous amount of option activity. people owning the high yield debt have to go in on the equity side, have to get the protection. that's where the selling pressure is coming from, and it's not going to stop. >> pete, look, i appreciate the china story, what's happening in the market and the currency, and i know that's a bigger issue from a macro standpoint. whether oil looks like it's going to get some traction -- >> started today. >> as oil continued its slide, on that chart we just showed you, the market went right with it. >> no doubt about it. i mean, when kinder morgan williams, a lot of these names we know a lot of people have been in some of these names, looking for that yield. they were depending on that
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yield. that's really part of what's really happening here. as that selling pressure comes, we talked about it yesterday as well, we talked about selling some of the winners and then actually all of a sudden the pain of the losers. well, the losers just continue to be bigger losers and bigger losers. that becomes a pain because then it becomes this vicious cycle. the domino affect just continues, and that's exactly what we're seeing right now. when you see the oil -- the way it flipped today, scott, in the first 30 minutes of the day the oih and xle, they were leading. before you knew it, by 10:00 this morning, half hour into trading, they were already starting to move to the down side. the only thing holding up was health care and a little bit of technology, but the energy and materials space pulling the market. it's exactly what's been going on so far in 2016. >> it's no wonder you continue to get negative commentary and notes from the street. jp morgan, a big note here that says sell any rally. >> yeah. >> they've gotten decidedly negative. their view, they say that the risk-reward for he equities is worse materially in contrast to the past seven years when we
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advocated using a dip as buying opportunities. we believe the regime has transitioned. >> a lot of strategists actually this year, more than i thought, have come out with that kind of commentary. sell the riffs. >> if only there were riffs. >> i don't know why we rallied today, to be honest with you. >> oil was up a percent. >> i don't know why we rally from yesterday. nothing changed other than to say that alcoa actually had some pretty decent commentary about their end market even though that stock is down quite a bit. anything commodity related is getting thrown out. i think, take a deep breath, and see what irnkz are going to be like. we're going to hear from the banks. >> you don't follow this advice? >> no. >> do you sell into anything positive in this market or no? >> what i have been doing is kind of buying bluechip stocks that where they yield attractively, like we talk about intel, like we talked about disney, comcast. i've been looking at jp morgan, buying a little bit of that. i think the banks are kind of
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interesting because they got hammered. i want to hear what the companies say on earnings. until oil prices stabilize, it's going to be volatile, for sure. >> rbs also has a note piggybacking off the jp morgan one saying risks are high. they're sticking to the 20% equity down side move. they think ewe going to get even more. >> it's so negative. >> they say sell almost anything. >> the comparison to 2008, everybody is sell now. clear the whole system. if you go back to 2008, fundamental differences that we had no banking system potentially. today you're looking at the energy and the commodity sector. yes, there are companies that are levered, that are probably never going to get to refinance. within that -- steph just mentioned alcoa. alcoa has -- >> are we underestimating the potential ripple effects of real pain and damage in the energy patch because we are convincing ourselves, well, it's not the biggest part of the economy, it's not like the banks in 2008, so we're discounting it too much when it has, you know, greater
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impacts that we're not fully taking into consideration. >> there's no question it has impact. >> bigger ones that we're giving it credit for. >> i don't think so. i think you're going to get companies that survive this, and they're going to consolidate and get stronger and coming out of this, this is the time to buy some of these because you are going to see companies down 40%, 50% in a year, 18 months. >> also, just a point, lower oil prices, a big beneficiary to the consumer and to services. if you look at -- >> i have been hearing that for months. >> if you look at a chart of jobs that we've created, manufacturing jobs we know they've been going down. obviously. oil and the impacts there. the services part of the economy, services jobs have actually been at all-time highs. it's been very impressive. there are parts of this economy, there are parts of the market where i think you absolutely can buy. how is lower oil prices not going to benefit them? they're sag a lot in terms of the consumer. guess what, consumer package companies, they benefit from lower raw cost. chemical companies benefit from lower raw costs. >> at the same time they're benefitting and falling into an
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industrial recession. right? where are the benefits? >> there's the manufacturing part of the economy, which you really don't want to be a part of, but the consumer part you do want to be a part of. they're going to be beneficiaries of this lower oil price and lower commodity costs in general. >> as oil prices continue to drop, concerns certainly rising over how some companies can survive a prolonged downturn. continental resources ceo harold hamm said this. >> there's been a lot of predictions about bankruptcies in this business, and, you know, it's a different situation than it was in the 1980s. most of the companies out there have long-term money that's not coming due tomorrow. they're in a lot different situation. >> brian sullivan, one of the point people on this very story looking for warning signs in that space. brian, you've traveled around. you have spoken with ceos, people who make a living in the energy patch. how bad do they think it could get, and what could the fall-out be as a result? >> well, scott, they think it could be very bad, and you heard
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harold hamm talk about long-term money. a lot of it is in debt. we are increasingly looking at the bond market. you talk about what the stocks are doing every day. let's look at the debt. debt people will say they're the real sort of foretellers of what will happen. these are just a few select names looking at stocks and high yield bonds. this is the high yield bond move, and a lot of these companies, guys, you know, are very small now because the market cap over the last -- ultra petroleum, jones energy, peabody energy, that's a coal company, obviously. their bonds have fallen 42% in just a matter of weeks. you have others, range resources, comstock, the list is too long. we'll mention some more at 2:00 today. you have to focus on the debt because this long-term money that harold hamm just talked about, a lot of that is leveraged up. there's only a couple of outcomes here. you can do a dealt swap like chesapeake did a couple of weeks ago. we're going to give you 50 cents on the dollar. you can do equity capital raise. probably impossible according to
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my sources in this market, except for all but a few players. or you can hope for a buy-out or private equity investment guys, and i'll send it back to you, but when i was in houston last week meeting with i mean, you know what they say? we thought about investing. things keep going down. we might just wait for the filing and come in on the credit side at the courthouse, if you know what i mean. >> yeah. a lot of people are betting that the pain is going to get a whole lot worse. brian, thanks. brian sullivan for us. pete, have you seen these bets in the options. >> yeah, we have. it started in august. we talked about freeport. take a look at marathon. that also started in august, and that's where they started to go out to february and then out to april. you look at the april 9 and 10 puts. you can see that some of the open interest has become absolutely massive, scott. when they initially started buying, many of these puts and these names, like marathon, $18, $19 when they initiated some of the buys. then you look at weatherford as well. late august, early september, huge buying in there. the february 7 put. when you look at some of these names, you will see absolutely massive, massive open interest.
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yesterday when we did talk about freeport, that february puts, the five puts, and, by the way, that stock today under four, but when you look at the five puts, over 83,000 of those have traded. these are not small trades. very inexpensive puts that people are making bets on. these are huge trades, and when they're buying these, they aren't really inexpensive when you look at the premiums. most of these are actually real premiums. >> you're in marathon. >> i'm in marathon. i'm in freeport. i got back in freeport yesterday because, you know, i couldn't take it anymore. i'm looking at this thing. i think, you know, just my opinion, i think it's going lower. i won't say the number i was going to say. >> i think we can read between the lines. >> yeah. >> we do have the number one rated big oil energy analyst doug terrison of evercore isi joining us on the phone. it's nice to speak with you today. >> thank you. hi, everybody. >> how worried should we be about the survivability of some of the very companies in your coverage universe, and you cover
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names that everybody knows. >> we should be pretty worried. almost every major strategic marker has come up negative for the oil market. demand side, imf, and world bank lowered predictions for growth, and they're talking about not just 2016 and beyond. then we get to the bad news, which is supply. opec, they're talking about increasing production, specifically saudi arabia talking about increasing production if demand rise this is year, which it will. we also wonder whether the decades old compact between the united states providing support and security for saudi arabia in return for oil market security has been severed. these are meaningful irz, and we shouldn't forget that because we have elevated strikes between saudi arabia and iran, there's a lot less likelihood we'll have cooperation in that part in 2016. we should be looking for safe harbor amid the storm. >> good luck. where are they? >> well, i think we have to start with the oil companies. in the names that we're
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highlighting are bp and chevron and exxonmobil. it's not going to be easy for these companies. they're going to have to cut their spending further and operating costs even further. we do think the dividends are safe, though. on average around 6%. with chevron, 16% reduction growth over the next four years. we have decent value proposition there. 2016 is going to be a pretty rugged year in the energy sector. >> what would have to happen to see the companies cut their dividends? >> well, we would have to see oil prices stay pretty close to current levels or slightly above for a couple of years. we think that's unlikely unless we have some type of recession. let's take perspective here. lower gdp growth support great for demand, but lower oil prices are. on the supply side, oil prices at this level are really going to put the hammer on the global basis. is it all going to happen in 2016? we'll probably start to see some and 2017. the market will begin to heal. >> a lot of people own these
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companies certainly now convincing themselves that the dividend is a good reason to stay put. you think the dif dendz themselves are going to stay put, then perhaps get solis from that. thanks so much for joining us. >> you're welcome. >> the number one ranked integrated oil analyst ever for isi. >> i don't think this is 2008 all over again, but i think it's important to understand the patience that you need right now. >> let me stop you for a second. explain to me the difference. at the top of the show you were saying you thought some things were like 2008. >> energy. >> now you're saying i don't think this is 2008. >> the overall s&p. the overall market i do not think this is like 2008. however, as it relates to energy and natural resources, this is their 2008 moment. crb index is trading well below where it was trading in 2008, so you have to ask yourself a question surrounding energy, what's the impact? as an example, financial institutions, you now have to ask yourself what percentage of their loans are energy centric.
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i can say you look at a kcolin and frost. cma, tcbi, a name i have mentioned, zions. you are all -- there you are talking about 5%, 6%, 7%. >> i got to get to a break. we'll have more conversation, though, certainly before the end of the program. coming up, we're going to monitor the sell-off in energy, including a check with the traders in the futures pit where the action is hot and heavy to say the least. plus, lululemon getting its mojo back. at least for a day or so. the stock surging after reporting a strong holiday season. find out if the traders are sticking with that one. and the latest moves in the 2016 portfolio competition. pete ripping up his playbook for the new year. sarat is making his debut in our battle for trader of the year. you're watching cnbc, first in business worldwide.
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four trades on four stocks. apple upgraded at bank of america to a buy from a neutral. firm saying reduced iphone production already priced in. let's get your take on this one, sarat, because everybody seems to have one these days. price targets cut, estimates cut, now a couple of upgrades in two days. >> i don't disagree. apple has been sold off. everybody is using it as a source of funds. they do have great products coming out. for the short-term the stock could definitely bounce. it has had a great balance
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sheet. probably a good place to be right now. >> time warner shares are highered on speculation about which investors could be in it and which ones are not. despite some reports, carl icahn confirming to me last night that he is not building a stake in that company through either stocks, options, or anything else. >> would you need to follow you on twitter to find out that information. i got that last night very quickly as you tweeted that out accurately. i think this is a name that's going to be in question all year. i mean, could amazon be interested in time warner as their potential spin this could happen with hbo? all of these questions remain throughout 2016. i think that's going to provide support for the name. >> intel getting ab upgrade. mizzouho raising its price target to $27. >> i have been buying it, actually. stocks down 9% and looking the past month. it yields 3%. the valuation is not commanding at 13 times, and i think that the pc exposure, while it's big
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at 60%, i think the growth more than offsets that, and that's the driver for the stock this year. >> how about lululemon. it's spiking today. the company raising its guidance on stronger than expected holiday sales. pete, you have been a bull. >> unfortunately, i did jump out. last week i jumped out. i feel decent about this, but not great because i missed today's move off with this news last night where they upped some of their numbers going into this. they talked about the holiday season. what really led us into this yesterday we were talking about underarmour and some of the disappointment there in women's closing. it sure seems to me that one of the places when lulu lost market share to nike and under armour, maybe now they're getting some of that back. >> i thought, wow, maybe there is something to that note yesterday from morgan stanley. >> i'm right there with you. i would think that it would make some sense. i mean, they're over some of the headaches that they've had. when you look at the rearview
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mirror, some of the headaches this company had to deal with. the yoga pants, and t-shirts. there's all kinds of things. >> i did read some other commentary today on this particular name that said, okay, this is great, but one quarter or one holiday season doesn't change the entire story. >> it doesn't. >> in this environment it actually is very impressive. those comp numbers are huge as a story on lulu for this year. it's not so much the comps. we know they've got the product, and ey fixed it, or are fixing it. it's the margin story. they're still very depressed. can you get serious operating leverage this year if they could just get margins back. >> this is the focus on margins, and the other is getting the whole supply chain, and it's about keeping track of the commodity itself. not having to get discounts and over supply. >> all right. coming up, put me in, coach. our rookie of the year, sarat, unveiling his picks for the challenge. plus, an interview with a top health care fund manager. find out how he is dealing with
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>> rosenberger, warm up. you're going in. >> yeah. we have a rookie. sarat, welcome to our halftime portfolio competition. what's your strategy going to be? >> i think it's to focus on the consumer. i think the consumer like we talked about, 70% of our economy, yets that where the money is going to be. it's been fast and furious with oil dropping to $30. their pockets are getting full. as soon as we see some stabilization in oil when the consumer actually thinks this is not a short-term cut, but more of a permanent cut, you'll see the consumer sector i think do well. >> what are your picks? >> in the sector i think you'll play a few different ways. we have macy's. on the restaurant side yum brands, which has not only local but global exposure, and then
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time warner. qualcomm i like a lot. >> guys, let's kick these around. how has our rookie done? >> macy's is hit down, down, down, but i love the fact that starboard is in there trying to shake things up. are they going to be able to convince that board to be able to do that? i ask you, sarat, is that part of why you like macy's right now? i know the stock has been beaten. i know it's inexpensive. it's been inexpensive for with ten points to the down side. why now? >> sure. i think the floor is absolutely right. the real estate. if you look at what happened in the winter with weather being so bad and the strong dollar, that really hurt them. they're down 40% in terms of stock price. they're one of the best omni channel players out there. they're in the top ten. i think there's some value here. i think in the short-term, you can get some value.
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>> good stuff. glad to have you participating this year. >> thank you. >> it will be fun. you need an emoji for sarat. >> oh, will he get one. joe loves his. >> did you wear the sweat shirt during the holidays? >> my daughter did. >> can you follow all the action, by the way, cnbc.com/pros. we head to break. back near session lows. oil continues to drop. coming up, the under 20 club. fitbit, gopro, twitter, all below that level. big sell-offs continuing. are any of them buys? plus, oak mark bill nygren joins us with value picks including beaten down energy names that he has been loading up on. ned. style... ...reinvented. sophistication... ...redefined. introducing the all-new lexus rx and rx hybrid. agile handling. available 12.3-inch navigation screen and panorama glass roof.
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here's your cnbc news update this hour. bond has been posted by the mother of a texas teenager who successfully used an affluenza defense after killing four people in a wreck. her bond was reduced from $1 million to $75,000 for a class c felony. she is charged with hindering apprehension of her 18-year-old son, ethan. the cook county jail in chicago placed on lockdown after staffing dropped below normal
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levels. 18% of day shift workers. german police say soccer hooligans and far right supporters went on a rampage in germany causing destruction to property. cars were damaged. shop windows were smashed. garbage bins were set on fire in the anti-migrant rampage. nice brand mandarin oranges have reports of glass shards being found in the containers. three customers reported finding the glass. one person was injured. these are being recalled. back to you, scottie. >> thank you so much. check in on the energy trade. take a look at where brent, wti, and energy stocks are. there's wti. down 4%. barely hanging on to that $30 level. right now it's at the lowest level in i think since 2003. something certainly to keep an eye on as the xle continues to fall. oil services continue to fall as
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well. let's continue that conversation with one of morning star's highest rated fund managers known for buying stocks some investors are giving up on. bill nygren runs the oak mark select fund. good to see you. happy new year. >> thank you, scott. same to you. >> how is your view shaping up here in this very early part of 2016? >> well, i would say at oakmark we look at 2016 the same way we did when we came into 2015, thinking that on our five to seven year time frame interest rates are likely to move higher, commodities prices are likely to move higher, global growth is likely to be stronger, and the dollar is unlikely to be the headwind that it was through most of last year. most of those items didn't work in our favor last year, but we don't see any reason to change our forecasts that over the long-term those items all go back to what we would call more normal levels. >> so in a sort of discussion over a battle between value and
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growth stocks where are you starting to hear more voices favor value, are you as well, or no? >> well, i think of what we do at oakmark as always being value. we're always trying to identify companies we think are selling at a meaningful discount to ongoing business value where we think that value will grow over time and where management is focused on maximizing per share value. i think a year ago prices in the market were a lot different. we owned amazon a year ago. last quarter we sold amazon and bought allied financial. if you look back in about april of last year when ally was coming public, it cost you 11 or 12 shares of ally to buy one share of amazon. today it costs 38 shares. i think part of what oakmark has always been about is price matters, and at the kind of ratios we're at today, i think the values are much in favor of
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traditional value stocks. you look at ally financial. it's down by one-third. it's selling at two-thirds of tangible book. seven times earnings. everybody is concerned about auto loans today, but the terms on those loans are about the same level they were a few years ago. ally's business is primarily to prime borrowers, and unlike the homeowners, car lenders are used to lending against depreciating assets. we think ally is a great buy at this price. >> in your selling of amazon, are you making a broader statement, though, about what you think about those stocks like fang stocks, the facebooks, the netflix, the amazons, the google. clearly you must be in some respects if you are selling such a favorable name like amazon as you view the market. >> we make all our decisions on
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a stock by stock basis. when we bought amazon a year and a half ago on a price to sales basis, it was selling at a discount to bricks and mortar stores it was putting out of business. today it's selling at a large premium. we still own google. it's one of the few that you would call growth stocks that we own. we think the market generally underestimates how profitable search is, and we like the new reporting structure that google is going to be using that we think will help investors see profitability of search and the large investments that google is putting in to other businesses. in the past it's just been reported together, and it's been anybody's guess as to how much the profits are versus how much the losses are. >> you sticking with anadarko and apache? are you just throwing your hands up in the air at this point with energy? >> a little bit of both. we are sticking with them. i heard you say in the early part of the intro that we are loading up on oil stocks. i wouldn't classify it as that. we're not getting anywhere near
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to being the oakmark energy fund. we do add to things that go down in price when we don't think long-term value has been impaired. i think if you look at $30 oil, if that's a permanent fixture, the whole u.s. enp business goes out of business. that's why we think $30 oil isn't a permanent answer to the price. we think oil prices need to be more like $60 or $70 a barrel to induce companies to find enough oil that will be required to support global demand, and if global economies grow over the next five years at 3% to 5% a year that the world bank is forecast, we'll use more energy. the shale wells that we have in the u.s. today have rapid decline rates. we need to get pricing to a level that will induce enp companies to produce more or we're going to have a massive shortage. >> hey, bill. nice to see you again. we'll talk to you soon. >> thanks. >> all right.
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oakmark's bill nygren. crude oil hitting a fresh 12-year low. jackie deangeles at the nymex. >> thank you, scott. as a matter of fact, we were closely approaching 30. we just hit a new session low of $30.08. this crude crush continuing. jim obviously part of the story is supply and demand. the other part people are getting increasingly word about is dollar stream with specific respect to the chinese yuan. what's driving crude right now more? >> i think until the dollar makes a very sharp move, and it's been caught in a relative range for several months now since we digested the big news out of europe. i think supply is the bigger part of the story right now. we always kind of pretend that demand is dwindle, but i don't see it from any sort of huge way. i think supply is the story. storage costs are more the story. i think once we're in sniffing distance of that 30 level, i think it's going to give. >> you and i talk about this all the time. new lows, fresh lows, lower lows. are we going to cross 30 soon? >> no doubt about that.
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we are so close to it right now that i've been down here 31 years trading these markets, and if traders get so close to a number, especially a number that we haven't hit in 14, 15 years, they're going to take it through it. the next support is $29.60. it's very light in crude oil. there's bigger support at $27.50, $28. we could have two more dollars lower through the $30 handle. >> okay. more crude oil on the live show at 1:00 p.m. we will also be talking about u.s. stocks and their volatility with relation to china. this is with ethan harris of bank of america merrill lynch. that will be 1:00 p.m. futures now.cnbc.com. >> we'll be there. thanks so much. joe, give me a quick comment. how damaging psychologically is breaking below $30? >> i don't think it's that damaging. i just think it's the continueance of the down trend. >> you hear two handle, two handle. >> you could hear one handle at one point. no one knows how low is low. no one understands that. i think, again, i go back to the top of the show. i think the relevancy of all
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this is oil is holding back the s&p 500, okay? earnings might be good. it's holding it back. i still believe the best thing that could happen for the s&p 500 is to take out the lows, get it over with from october, and that will be the moment of capitulation. is oil the catalyst for that to happen? yes, it probably is, and oil probably has a $25, $26 handle on it at that point. a formation like yesterday of the s&p 500 is awful. it sucks people right back in and get longs at higher levels as we did 30, 40 handles higher this morning, and that's a problem. >> yeah. only seven trading days into the new year. biotech stocks are already in a new correction. ahead, an exclusive interview with health care hedge fund manager alex denner. used to work with carl icahn. or worked for carl icahn. how is he navigating the sell-off, and where is he seeing opportunity? as we head to break, here's a look at the dow 30 heat map.
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cnbc, first in business worldwide. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
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coming up on "power lunch" at the top of this level, oil ticking at $30 a barrel. we'll speak with one top lais that says oil is headed to $20. the question -- how long will it
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stay that low? the high quality bluechip names that you may want to take a second look at in this recent selloff, and small caps in a bear market. not all sml caps are created equally, right? we have five star stock picks ahead. all that and more. back to you. see you at the top of the hour. >> the jp morgan health care conference continues today in san francisco. that's where our own meg terrell is live with an exclusive interview. alex denner with the health care hedge fund sarissa capital, icahn pedigree as well. meg. >> that's right. thank you so much. thank you, alex, for joining us. >> thank you for having me. >> especially on a day we know it's your son, lex's, birthday. thank you for sticking around and doing this interview. yesterday was a really bad day for biotech. do you think we're in a new normal for biotech valuations right now? are we going to come out of this? >> i think there is something of a revaluation going on. i would expect that this sort of -- this kind of volatility, i don't know that we'll have the same extreme as a volatility
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that we had since the beginning of the year, but this is volatility that will continue for a while. i think -- i have been of the view, personally, the past couple of years valuations have been on the high side of what is reasonable, and, you know, for most stocks now, that's probably not true. i think a lot of stocks out there are very reasonably priced. there are still, you know, when you have kind of rapid dislocations in the market, the stocks don't all kind of get to the right place. some of them still are overvalued, and some haven't come under value, and that will kind of -- we'll still see the movement back and forth for some time. that would be my guess. >> what do you feel like is driving it so much? there's a lot of talk about drug pricing, but is that it? are there other macro environments? what's driving -- >> macro is clearly there. drug pricing. i think that it's very hard to predict when things like this happen. biotech sort of turns. it tends to be small news. like the last time there was a
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real big bubble in biotech, the event that catalyzed the downturn was when the announcement came that the human genome was sequenced. it reminds investors, hey, we have to check in with what the valuations are and if they're out of whack, then people sell. we've seen a lot of supply coming on to the markets, and that's probably one of the factors in addition to macro. pricing is going to become because of the presidential elections, it's going to be sort of a front page news item for at least, you know, kind of until the presidential elections are over. >> one thing i have been hearing from ceos here is the new valuations, the lower valuations, makes companies riper for m&a. will we see an uptick because of these? >> i do. i think -- it's my belief that a lot of the larger companies have been looking to do acquisitions, whether they be, you know, kind
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of small acquisitions or bigger acquisitions. i'm aware of number situations where companies have larger companies just, you know, strategically wants to do a deal with a smaller company, but can't make the valuation work. when you see the stock prices reflect lower valuations, it becomes easy for those deals to build. it's important to remember, though, that the companies where their stock just fell don't kind of immediately recognize that, right? they say, oh, three weeks ago my stock was x and now it's .7 x or whatever. it does take a while for that to kind of sink in. i wouldn't expect some kind of joointd giant jump in m&a. >> speaking of one company in particular, you just were named chairman of ariad. a company you have been involved with for some time. just named the new ceo there. some folks wonder iffed your involvement with the company would lead to selling it. what should we think billion for the future of the company? >> we're excited to bring in a
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new ceo, and i think there's a lot of refreshment we can do at the company. really great people, great products, and we just want to bring a new level of accountability to the company. you know, in terms of m&a specifically, our near term plan is not to try to sell the company. i would say, you know, kind of over the long-term ariad will probably be working with or part of a bigger company, but that's something i wouldn't want to -- in respect for short-term, it could happen, but we'll do it only when it's the right thing for investors. >> a lot more to ask you about. we'll have to leave it there for now. we're out of time. thank you, alex, for joining us. >> thank you. >> stay tuned. we have a lot more coming up from jp morgan, including in the next hour, ceo of biomarin. >> alex, good to see you as well. thank you, meg. call your attention to the headline that jeffrey gundlach says that the technicals at least to him show that you could have a short-turmoil bottom
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today. crude barely hanging on to 30. could go under that really at any moment. joe, you watch the techanicals s much as the fundamentals. maybe not. i don't know. tell me. >> that would be great. love to see it happen. i'm not sure exactly which technicals jeffrey is talking about. i'm sure he sees something within his office. that would be a great thing if we see a bottom and the s&p could finally rally. >> more on that, the option monster has awakened. the jeannie is out of the bottle. whatever you want to say. pete has a new strategy in the halftime portfolio challenge. he is going to reveal it next. it's a fact. kind of like working from home equals not working. numbers look pretty good, how's it on your end dave? oh, the numbers look so good. dave, dave's on it.
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after a disappointing last place finish in our halftime portfolio competition, pete is ready for a comeback. >> i am. >> currentlyn second place. what's your strategy going to be, pete? >> we've done this thing for the last couple years. 2014, scott, when we were doing this, i didn't make any trades and i did very, very well in that competition. i think joe won, john was in the top three or four and i was right in there as well with 20-something percent gains. last year i was trying to do the same thing. i liked my picks. i lasted far too long. i used them as investments, not trades. this year i'll be trading more. especially given this market that we're in, scott, we see it in first couple trading sessions
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of the year. i think i got to be more aggressive based upon how volatile this market really s. >> you mean we can retire the #helppete? >> you can retire that. that's a good call. >> give me an idea of what that portfolio looks like right now. >> what i got now? i like starbucks. we know about the international and the pricing power of starbucks. coffee prices goup, their prices go up. coffee prices go down, they continue to go up. it is something absolutely beautiful when you look at starbucks. i think that news today about their growth plan, strategy for kline, that's going to get executed very well. we know about the international. i think they'll do well. microsoft, one of my favorite ceos. he was the right man for the job. he's done an outstanding job in transition of microsoft, turning them into the behemoth that they are. that's where the revenue is going to come from in the future. i think there spleplenty of sho term growth as well.
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>> risk/reward seems to be favorable, right? >> i love my guy bob peck tlachlt is one reason that i went with this pick. bob has been so right on so many different areas whether it's yahoo or twitter. he has been the man. he was actually on very recently just talking about twitter and what some of the catalysts are. i believe that he's right there. i think you got to believe in jack. jack dorsey is back. i think there is a plan in place. we probably won't really see some of the fruits of whatever they've been working on, the moments, the google deal, especially. also, they address something that i said they've had to address for a very, very long period of time. the 500 million folks who logged off, they're going for them. you add that to the 300 million active viewers, scott, you're talking about 800 million. you start to approach a billion, that's great for advertising. >> look, like i said, in a competition like this, risk/reward is favorable. twitter under $20 doesn't take
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much movement to pay off in a portfolio game like. this. >> i think i'm in around $22 or something like. that i'm getting hurt a little bit. i think there is far more upside than down side. >> nor, pete, i appreciate it. nor has it been helping fitbit and gopro. they made the under $20 club. they're all under that level. >> nothing about those three names i do like. i don't like any of them. i don't like any of them. i'm going to make my expectation for 2016 is pete wins. >> come on, man. >> pete's going to trade more, pete's going to win. i like his strategy coming out of the gates. he has cash on the sidelines. i like the names he's n he doesn't have the energy exposure. pete's going to win. >> he'll make his way back to the desk, too. i want his comments on gopro and fitbit? >> i'm not a fan of the stocks either. i think they're speculative in nature and there are cheaper stocks in there. when the market stabilizes a comeback, you'll see more money
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going to -- >> that's a problem. if uber growth sort of falls out of favor in a more meaningful way, aren't the stocks going to struggle? >> they co. they have competitive issues. maybe not so much as twitter. think about fitbit. how many other companies are trying to do the same thing? the interesting stock is starbucks. that is such a steady eddie. and shultz's comments last night really very positive about china. everybody is kind of dinging china. he is saying that they're going to grow 500 stores a year there tlachlt is impressive. i like that one. >> i have to go. pete, you buy either gopro or fitbit? >> if i twor buy one or the other, i'd be in fitbit. gopro, i think that gets intriguing. >> are you ready to win tomorrow night's powerball drawing? well, luckily billionaire mark cuban is offering tips how to hand that will win fall. your path to retirement... may not always be clear.
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our biggest loser on the s&p 500 are in the upper right hand corner of your screen. williams is the worst down 15%. we highlighted it at the top of the show. the stunning drop. year to date already for williams and freeport. there is sw energy and alcoa which reported last night. they're down nearly 10%. if you win the powerball, none of it really matters though. $1.5 billion is where the jackpot stands right now. mark cuban is offering up some advice for the winner. cuban says the first thing you should do is hire a tax attorney. he says don't take the lump sum either. you don't want to blow it all in one spot. he also tells you to tell your friends no. why? because they'll all ask for money. anyone who asks, he says, is not your friend. guys? big plans for this jackpot? >> is everybody playing, by the way? >> i played the previous one. i'm going to have to get into this one. i'm not in right now. i was in the previous. >> i played the previous one. i will play this one and i bet
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$2 on the lottery every year since 1998. that's your best chance. >> yeah. >> you just do the annual subscription. >> i want to actually end the show on a serious note, i should say. not necessarily positive. we're talking about stock market. whoa! second half trades, about a minute left. oil? how concerning is it to all of if you the slide continues? stock market can't do anything if that happens. >> it can't. then our focus will be on earnings. let's hear what the consumer companies have to say. i'm still global on the consumer. >> i don't think the chinese, you know, story with their currency is over yet. that brings up a point, how much further is the down side there? >> that is anice double whammy for investors to get their arms around if they haven't done it in last couple of sessions. but if you get more pushing down, and then you have the pushing down of oil together, you don't have -- >> you don't have a floor. the market will keep on swelling
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up. if you're a long term investor, stay invested or add more to your investment. >> keep an eye on intel. looking at the consumer and the outside of energy and all the rest of it, intel. >> guys, good stuff. see you tomorrow. "power lunch" begins now. welcome to "wer lunch," everody. thank you very much. i'm mandy drury. i'll sooil is falling once agai big time today. >> as oil goes, so goes stocks. you see the dow starting off well. but tumbling now. there is the west texas crude down $1.23. there is oil, a brief flurry, back above the flat line. down a modest 24 points at this hour. >> let's get straight down to the stock exchange to the floor of the nyse where we find bob pisani. is thereth

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